The rumors circulating for the last month or so seemed too fantastic to be true, but true they were. In a jolt to many, it was announced on April 19, that printer OEM, Lexmark, was acquired by a consortium led by Apex Technology Co. Ltd. and PAG Asia Capital and including Legend Capital Management Co. Ltd.
It was reported that the Consortium agreed to acquire Lexmark for US$40.5 per share in an all-cash transaction with an enterprise value (including unfunded pension liabilities and disclosed restructuring costs) of approximately US$4 billion.
It was also announced that the transaction has been unanimously approved by Lexmark’s Board of Directors and represents a 30 percent premium to Lexmark’s undisturbed closing stock price on Oct. 21, 2015, the date prior to the news of Lexmark’s exploration of strategic alternatives becoming public.
Lexmark had been struggling for years and it was no secret that it was up for sale. In the past year it was reported that Lenovo, Konica Minolta, Canon and Ricoh were all prospective buyers.
Based in Zhuhai, China, Apex began as a third party chip supplier when Chinese aftermarket imaging supplies giant, Seine Technology, sought greater vertical integration. Seine is reported to be the current majority share holder in Apex Technology.
In what was arguably last year’s most shocking news, Apex acquired aftermarket supplies giant Static Control Components (SCC) in May. Once fierce rivals, the acquisition gave a Chinese aftermarket company a solid U.S. foothold and even fueled speculation about the future direction of SCC.
Probably the most fascinating aspect of Tuesday’s announcement concerns the new relationship of two other bitter rivals. For years Lexmark was the most litigious OEM in the aftermarket toner space and the legal battles between SCC and Lexmark dominated the headlines. It is a strange irony to see them under a common parent company, and it will be interesting to see how they work together in the future.
As for how this new relationship will affect the market, we can only speculate. But Jackson Wang, Apex Chairman, has expressed his optimism about opening up Lexmark to the Asian market.
“Apex has traditionally been successful in emerging markets and in cost-effective production,” he said. “We are excited to work alongside Lexmark as they continue to invest in advanced technologies and solutions to best serve their customers and business partners, while simultaneously pursuing untapped opportunities in emerging markets particularly in Asia for future growth.”
On the aftermarket imaging supplies front, which has long been a saga for Lexmark, the transition should prove very compelling. Lexmark and SCC have an open suit that will almost certainly be dropped, but will Lexmark continue to fiercely protect its brand and patents like before? With roots in the aftermarket and partners poised to take advantage of this new relationship, the answer could be: Why not?
The Consortium announced that it intends to maintain Lexmark’s corporate headquarters in Lexington, Ky. Paul Rooke, chairman and chief executive officer of Lexmark, is expected to continue to lead Lexmark after the transaction closes.
The merger, which is expected to close in the second half of 2016, is subject to approval by Lexmark shareholders, regulatory approvals in the U.S., including the Committee on Foreign Investment, China and certain other foreign jurisdictions, and other customary closing conditions.
Click here to read press release from Apex and PAG.
Click here to read press release from Lexmark.
